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The payments landscape is changing almost daily and the
overall industry is truly one of the most exciting business
studies around. Payments? Exciting you say?
Yes, well if you don’t’ think $1 trillion up for grabs in
the next 5 years is something to get excited about I would check
your pulse.

As an natural observer I tend to look under the hood whenever
something unusual is going on, since whenever peculiarity is
present change happens. Curiosity is actually what drove
me to start Seconds, my mobile payments company. It all
started with observing how consumers interacted with merchants,
repeat interactions in particular. Isn’t it funny how we go
to the same coffee shops, restaurants, retail stores, gas
stations, and other everyday activities each day. In fact,
we do this so much the person at the counter who “swipes” your
card actually recognizes you and may even know your name.

Although loyalty started my entrepreneurial journey, it did not
end there. I started to think a bit deeper about what
usually happens each time you go to the coffee shops,
restaurants, retail stores, or gas stations? You got it –
payment! There it is, the one data point which can trace
commercial actions, habits, relationships and trends.
Imagine being able to aggregate and see all those data
points in your own life. Things like where you spend your money, how
much, when, buying what and how often. Now imagine it on a
merchant wide level. How about a worldwide level? I
think you get the gist of where we are going.

This thinking brought me to Seconds, which is the fastest way to
transact and interact with merchants. I believe if you
speed up a traditionally laborious process, make it available to
the widest range of people possible and emancipate the data to be
used in adding value to the system, great things will happen.

During this study it came to my attention how much the payment
experience has evolved, and how much more it will change.
Below is a quick discussion on where we have come from and where
we are going with digital payments. You will notice this
discussion is all about digital payments,
since cash and coin have always been available and will still be
around for quite some time. The current focus is on the
digital payment experience and the changes we should expect.

Payments 1.0

When plastic cards came into the market the obvious question
became “how do we use these things?” Naturally, swipe
terminals popped up in retail locations everywhere, in addition
to such places as gas stations and movie theaters. Major
players like Verifone, WorldPay and others transact billions
of dollars each day through proprietary devices which translates
information from your plastic card into electronic data and
ultimately ending in a transaction.

Important to note is the placement and positioning of the
terminal, which can be found on the specific merchant’s
counter or apparatus. Why is this important? Without
the terminal, I cannot pay. No terminal, no
card, no soup for you! This gave credit card
companies and the electronic payments companies a leg up in the
economic chain. But innovation has no master and things
quickly change.

Payments 1.5

We are
currently seeing new methods of swipe transactions involving the
mobile device hit the mass market. These swipe solutions
enable a mobile phone or tablet to become, in essence, the
terminal itself. The terminal has jumped off the merchant’s
counter and into their hands with products
like Square or PayPal empowering anyone to become a merchant.
All anyone needs is a mobile device, the app, and the swipe
dongle attached to the device. They are now ready to take a
card payment.

As amazing as these solutions may be I argue they don’t truly
change the payments space, they only augment it. They allow
us to use our credit cards at more places – which depending on
who you are that could be good or bad – yet it’s still a credit
card. Some people call this mobile payments but it’s really
just a mobile terminal. The requirements of products and devices
can be cumbersome and troublesome if lost. Forward
progress? For sure! But not truly an innovative new
movement which will have landscape shifting effects.

Payments 2.0

True innovation upsets the masses and ultimately establishes a
new norm, with new rules and new players. Virtual
transactions – payments made without having to swipe, show or
display anything – will transform the payments landscape like no
one has ever seen before. Since people carry their mobile
devices with them everywhere, it makes the most sense to streamline
transactions through the computer in their hands. True
authentic mobile payments do not require any hardware outside of
the mobile device. With cloud computing and off site secure
services holding payment credentials for every consumer, people
now have an ability to make simple, quick and easy mobile
payments ANYWHERE. As the consumer, the terminal is
now in your hands.

Platform agnostic solutions will enable any mobile device holder
to transact and make a purchase with any merchant or brand
connected to the platform. It shouldn’t require me to have
an iPhone, Android or any other specific device. I
don’t’ think “sorry, we only accept iPhones” should
replace “sorry, we don’t accept American
Express.” Everyone is created equal and every
dollar bill is $1.00, no matter who is holding it. This
principle should remain the same as we evolve into a purely
digital society and work through determining the appropriate
payment methods.

And as payments become virtual, platforms such as Dwolla start to
make a lot more sense. If you were a merchant looking to
accept mobile payments, which would fee you rather pay – a flat
25 cents or between 2-3% of a transaction? It’s no contest,
Dwolla’s fee structure could put credit card companies directly
out of business, unless they bring down their fees to a
competitive level.

I have said this before but it bears repeating: what if SMS
messaging was not only for communications? What if, as a
very efficient information transport mechanism organically
built into billions of mobile devices around the world, it was
used for payments and transactions? Seconds drives
secure payments through text messages, allowing someone to
quickly make a instant and automatic transaction by simply
texting a keyword to a merchant. Conversely, a merchant
can ping your mobile phone with a message to complete the
transaction by simply responding with a specific prompt.
How did they know to do that? Your phone number has
now become your payment credential, and interestingly enough they
can instantly reach you via short message from pretty much
anywhere in the world. Imagine how things will change when
we all can interact and transact with any brand in the world in
Seconds?

I am not sure how much quicker we can make things but a seconds
is pretty damn quick.